Ranbaxy recalls generic Lipitor in U.S., shares fall

Published 3:53 PM ET Mon, 3 Dec 2012
Reuters

MUMBAI (Reuters) - Indian drugmaker Ranbaxy Laboratories Ltd has voluntarily recalled its cholesterol-lowering drug atorvastatin in the United States, a development that could dent its image further in the world's biggest prescription drug market where the company faced an earlier ban.

Ranbaxy did not specify the reason for the recall of the drug, which largely drove the company's sales in the first of half the year. Shares of the company fell more than 4 percent following the announcement.

The recall of atorvastatin, a generic version of Pfizer Inc's Lipitor, will temporarily disrupt supplies in the U.S. market while the company conducts an investigation that is expected to take two weeks, it said. Lipitor is considered as the world's best-selling drug ever and at its peak generated $13 billion in one year for Pfizer.

Ranbaxy was the first company to launch generic Lipitor in the United States after Pfizer's patent expired last year. The Indian company enjoyed marketing exclusivity for the first six months that generics were allowed to be sold along with U.S.-based Watson Pharmaceuticals Inc.

"The development will impact the company's credibility to an extent," said Bhagwan Singh Chaudhary, a research associate at the brokerage IndiaNivesh. "There have been issues in the past (about compliance) and a recall suggests, corrective measures suggested by the U.S. FDA are not being implemented."

Other drugmakers including Indian rival Dr. Reddy's Laboratories Ltd have since launched their own generic atorvastatin versions in the United States.

Controlled by Japan's Daiichi Sankyo Co, Ranbaxy has had a troubled history in the United States where shipments from some of its manufacturing plants were banned from 2009 over a compliance-related probe.

The ban was troubling for Daiichi Sankyo, which acquired a majority stake in the Indian company for $4.2 billion in 2008.

Early this year, Ranbaxy agreed to make broader changes at its plants and agreed to appoint an external auditor to resolve the dispute with the U.S. Food and Drug Administration.

It has also set aside $500 million towards any settlement charges it might have to pay.

Shares of Ranbaxy, which is valued at $3.93 billion, were down 3.5 percent at 494.85 rupees as of 0950 GMT, underperforming a 0.07 percent fall in the Mumbai market.